Social Media Gets the Local Spending Growth, Partly by Default

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Social media marketing remains the biggest target for increased spending, both by small local merchants and enterprise marketers supporting their local branches and distributors, according to Street Fight survey analysis. It is widely used, and deemed effective, particularly by SMBs. But when you dig deeper, it looks like most local marketers are using social media as substitute for display advertising – and to reach mobile audiences – rather than as a uniquely local or even “social” medium.

Street Fight surveys of local merchants (local businesses with fewer than 50 employees) and enterprise local marketers (multi-location brands) show just how widespread social media has become as a local marketing tactic. Nearly three out of four local merchants use it regularly — even more than email marketing — and twice as many (40%) are buying Facebook ads as were doing so a few years ago. Nearly half (46%) of enterprise local marketers regularly use paid social media ads, and a similar portion have a company page on social media. And as shown in the figure below, the social media marketing budget is the digital tactic both groups are most likely to increase.

Most marketers wouldn’t be increasing their spending if the tactic wasn’t effective:

  • Local merchants rate social media as their most effective tactic: over 60% put it in their top three overall, and among social marketing types they rated paid Facebook ads nearly as high as free Facebook company sites. Local merchants continue to say new customer acquisition is their most important marketing objective, and they’re primarily using social media to raise brand awareness, rather than to generate leads or sales. 
  • Just under one third of enterprise local marketers listed paid social media in their top five most effective tactics list, right behind email and ahead of other online display ads and TV. They rated their own local sites and social media company pages as roughly comparable in effectiveness. For those big marketers, Facebook usage correlated most with success at raising brand awareness.

Digital marketing agency iProspect just released its third quarter paid social study based on its analysis of the social media marketing from over 200 brands it manages. The study doesn’t specifically focus on local campaigns but it confirms spending growth and calls out some noteworthy patterns. The study says that quarterly spending is up over 76% year over year, but it’s all Facebook (and Instagram). Other social networks are down, while Facebook spending more than doubled. Over 80% of the spending on Facebook was for the mobile news feed.

The iProspect analysis attributes all this Facebook growth — which is driving up prices as determined by cost per thousand and cost per click — to the social network’s efficient scale and targeting. It says marketers are seeing brand lift as well as conversions, though those conversions seem more likely to be video views, page site visits, or app installs than sales. iProspect alludes to Facebook’s effectiveness at driving in-store sales, but doesn’t provide any further data, or discuss things like offers or coupons.

For local marketing, social media currently looks like a relatively low-cost display ad medium with unparalleled reach and good targeting (re-targeting customers and lookalikes) for multi-location brands. It’s the same thing — though less sophisticated — for small business, plus a free company page with increasingly useful features. Facebook is the driver in social media marketing, and it has been steadily adding capabilities to its company pages: e.g., maps, ratings/reviews, redeemable offers, minimal e-commerce. It has been building out dynamic mobile ad features for brands based on proximity, including click-to-call, ask for directions, auto dealer inventory, and messaging. And it’s experimenting with optimizing that targeting for likely store visitors and enabling an API to connect point of sale data for online-to-offline attribution. Agencies and tech providers are working hard to connect the dots.

But Facebook has whiffed on local search, and after a disastrous attempt to use its social graph to put your friends in ads, hasn’t really exploited the communications, friends’ interest, or much of the brand enthusiast/viral passalong capabilities that should ultimately differentiate a “social” medium from a broadcast one. Street Fight contributor Damian Rollison (who is also product VP of Street Fight parent company Brandify) offers a thoughtful critique of the newly renamed Facebook Local, its Yelp wannabe product. He wonders if Facebook’s Craigslist-like Marketplace might be its most effective local play in the long run.

As a local marketing platform, social media will continue to evolve, even as Facebook somewhat sluggishly pushes it. Agencies, marketing tech providers, and local publishers are still necessary to help small local merchants weave together some of the missing links between social media, search, websites, and email. That’s true, too, for enterprise local marketers. Multi-location brands should experiment with and/or at least keep abreast of Facebook’s local attribution techniques and offerings. And they should coordinate television and social/mobile video campaigns, whose budgets and analytics are probably in separate departments right now.

David Card is Street Fight’s director of research.

Click here for more on the The Local Merchant Report 2017, and here for Enterprise Local Marketers 2017.